He delivered this paper before the faculty and student body of Hillsdale College during the second seminar of the Center for Constructive Alternatives.
The theme of the week’s program is, in a word, charity. We shall be scanning the span of human affairs from Genesis to Galbraith, hoping to find in the recorded history of man some help on that eternal question of the extent and form of one’s obligations to his fellow men. Helping one’s fellow men in matters outside those we usually consider economic ones—such as things of the mind and spirit—is doubtless most important of all. But I shall restrict this discussion to economic matters, as implicit in our topic. At the outset, I should confess to being a sinner of sorts. I have never found that light by which the words in the Bible all shine forth with complete certainty as to what went on and what was meant, devoid of seeming contradictions. Let me illustrate. We are told in the book of Genesis that Cain was unhappy with the unfavorable balance of trade between the meat farmers (Abel) and the crop farmers (himself). He proceeded to solve the problem by doing away with all meat farmers (Abel). When questioned about it he responded, “Am I my brother’s keeper?” Subsequently, we are told, the Lord renounced the death penalty for Cain. What are we to conclude from that about one’s charitable responsibilities? Then, later, we are told that Ephron offered to give Abraham a plot of land for the burial of his deceased wife, Sarah. Abraham refused, insisting on paying for it with—of all things—silver. Does this event help answer our question? Still later there is an interesting story which goes like this, idiomatically. It seems that there was a lad named Joe who was subject to nightmares. Joe was the favorite son of his father who, one day, gave him a psychedelic coat. His older brothers, who had always been jealous of Joe, were given no such coats. And besides, they probably thought Joe was going
hippie.So they broke off diplomatic relations with him completely and decreed the death penalty. But due to a faulty switch, or something, Joe survived and soon fell into slavery. Now it so happened that Pharaoh also had nightmares about which Joe became the official interpreter. On one occasion Joe interpreted Pharaoh’s dream as forecasting a weather cycle whereby seven years of plenty would be followed by seven of scarcity. Joe, the leading political expert of his time, saw a chance to set up a social security scheme which, though disguised as protection of the people, would eventually enslave them. The scheme appealed to Pharaoh and he appointed Joe as a Cabinet member to carry it out. During the seven good years a 20 percent tax in wheat was collected and put in government warehouses. When the seven years of drought came, Joe sold—sold—the wheat back to the starving taxpayers year by year until finally the only property they had left was their land. Joe then said to them, in effect,
Give me the titles to your land, or I’ll let you starve.When they signed the deeds to their land over to the government, Joe observed,
Behold, I have bought you this day.Pharaoh was so delighted at now owning not only all the wealth, but also the people as slaves, that he gave Joe many gifts—gorgeous robes, a chain of solid gold, a priest’s daughter, and other loot. We could go on and on, such as to consider why the lilies of the field get along so well, how the Good Samaritan event worked out, what it means to love thy neighbor as thyself, and other biblical events. I shall now go on with an analysis of the problem in a manner somewhat in harmony with the view that God helps those who help themselves, as Ben Franklin expressed it. As a preview, I offer my favorite quote on this theme, from Maimonides, the Talmudical philosopher:
The noblest charity is to prevent a man from accepting charity, and the best alms are to show and enable a man to dispense with alms.
Production: The Source of GivingWe might start with the simple fact that giving can come only from what has first been produced. I cannot give bread to the needy from wheat that has not yet been produced. We are speaking, of course, about economic matters, because things that are plentiful and free pose no problem. This brings us face to face with the primacy of production as being unavoidably back of each and every form of helping one’s brother. The producer, then, is the basic benefactor of mankind. The conspicuous dispenser of alms which others have produced is merely a vehicle and not the real source of benevolence. In fact, the dispenser may even be a parasitic factor if his work ignores the discipline of necessity and competitive efficiency. H. L. Wells, as Vice President of Northwestern University, once gave illustrative figures for doing a dollar’s worth of charitable work.
|Give it direct||$1.00|
|Through a charitable society||1.08|
|Through local government||1.25|
|By local bond issue||1.75|
|Through state government||2.00|
|Through federal government||3.00|
What Is Charity?It seems necessary at the outset to dislodge our thinking from the customary rut about what is charity and what is not. On the surface, superficially, it seems simple enough; it is giving a crust of bread to a starving child, for instance. But that is a myopic view of a matter which extends far into time, form, and space, becoming more and more complex as it goes. Horace Gray, the distinguished Massachusetts Justice who later became a Supreme Court Justice, once had this to say:
A charity, in the legal sense, may be more fully defined as a gift, to be applied consistently with existing laws, for the benefit of an indefinite number of persons, whether by bringing their minds and hearts under the influence of education or religion, by relieving their bodies of disease, suffering, or constraint, by assisting them to establish themselves in life, or by erecting or maintaining public buildings or works, or by otherwise lessening the burdens of government.If there were time, we might dwell at length on this interesting concept of charity as being anything which lessens the burden of government; but with this being the first Tuesday after the first Monday of November and the air so full of dust about such possibilities, we should postpone that until some other time. Suffice to say, the concept probably stands higher in logic than in what passes as
lawin our time. I would plead that we consider the meaning of
helping our brotherin terms above and beyond any political plan or mechanism. The government, at most, is only one of innumerable organizations that may be presuming to be an agency involved in the process. If it is an act of charity to give a crust of bread to a starving child, how about giving him a second crust? A third? At some point of rising affluence from added giving, does it suddenly become non-charity? If so, precisely where? Or is some other criterion the one to use? If so, what? We shall discuss this question after considering other aspects of the problem, and now return to the point that anything to be given as charity must first have been produced.
Alternative Uses of What Is ProducedNot only must the loaf of bread for charity first be produced, but it can serve a charitable use only once—it can’t be eaten twice, in other words. This being true, alternative uses must be considered in terms of the same charitable objective. Let me illustrate. Assume that you deem it proper to give blood to the Red Cross. You may not, however, decide to give all your blood to that cause at any one time. As an alternative, at least, you might well consider keeping some of it for yourself, even in the face of being accused of selfishness. Or let us say that some wheat is under consideration. You might give all of it to persons who are at the point of starvation; or you might use it for seed with the view of having more later to give to more who are starving; or you might sell it and use the proceeds to pay the costs of trying to develop a higher yielding strain of wheat which, even later, will prevent even more persons from starving. Viewed in terms of real and practical alternatives, in other words, the objective of charitable uses of what has been produced becomes complicated and calls for great wisdom and foresight if benevolence is to be maximized over time. But in any event, everything produced will help somebody. Once produced, who is to decide among all these alternative possible uses?
Who Shall Decide?The one who shall decide the usage of any item produced is, ipso facto, the person who owns it. We do not have time to probe this issue of ownership to the depths it warrants, so I shall merely state my position boldly and clearly. It seems to me reasonably self-evident that ownership of anything produced belongs to the one who produced it—to the one who bore the costs of necessary inputs of his time and other ingredients. If we were to hold otherwise, we would be denying him the ownership of his own time and body—i.e., we would be prescribing slavery as the proper status of a man. A slave of whom, and by what right on his part? Having thus identified the placement of ownership of anything produced, we have thus renounced the right of anyone else to it. To deny anyone else to it is, ipso facto, to deny to any aggregate of other persons—be it political, private organizations, gangs, or whatnot—the right to take that thing from the producer, against his will, and assume the rights as owner which have just been denied to him who has produced it. St. Matthew wrapped up this concept neatly when he said,
Is it not lawful for me to do what I will with mine own?The just province of the producer as owner—or subsequent owners through valid transfer of ownership—is, then, to decide on matters of usage of what has been produced. It is his right, and his alone, to decide whether to
eatit, sell it, invest it, give it away. On what basis might he make the choice?
Choices Among Uses of ProductionAmong possible uses of anything produced, the top priority would seem to be to
eatit. To illustrate, let us assume, for the sake of clearness and simplicity, that you produce wheat and nothing else; that you have no other property. It would seem foolish for you to either plant all of this year’s crop or give it all away, and then starve. So assuming you eat some of the crop and survive, for that part left over you have the choice of either using it as seed or giving it away. (This ignores other possibilities which are only diversionary forms.) Which shall it be? In terms of Austrian economic theory, what you do with your wheat is strictly your problem, not mine. Fortunately, I do not have to decide for you and have enough of a problem deciding for my own. Yet we may all use some general guides for a decision. Since the initial reaction of most persons is that the charitable thing to do is to give it to the needy, some sticky problems immediately raise their ugly heads:
How do we define ‘needy’? Precisely which persons are needy and which are not? Are the ‘needy’ only persons, or should we include cattle, dogs, field mice…?
Who Are the Needy?The more one thinks about it, the more elusive becomes the word
need.The son of a friend in New Hampshire, then in second grade, was pressed by his teacher as to what he meant by
necessity.To appreciate his response, it is relevant to note that he was one of a family whose gross income for the two decades from 1927 to 1947 had averaged about $200 a year, with taxes taking about $50 of that. The lad replied,
A necessity is something you have to have, or you die.That definition is probably not the one being used by H.E.W., but let us follow through with it a little. I recall how a famous national philanthropic foundation poured great sums of money, over a long period early in this century, into prevention of yellow fever in India. That seemed clearly to be a
necessity,because without it they would die. The effort was notably successful. Untold millions of Indians were saved from dying of yellow fever—lived to propagate offspring in great numbers who, in turn, lived to face death by starvation. Contemplating this in retrospect, one wonders why those foundation officials at the outset had not asked,
Is it more humane, more charitable, to use our resources to prevent one person from dying of yellow fever or to do something to prevent a larger number of persons—two, three, four—from dying of starvation?What I wish to suggest by this illustration is the profound wisdom reflected in the quotation from Maimonides, given at the outset. If human resources are used in such a way as to cure one need but thereby creating another equal need, is it being charitable? Or if in so doing, another and greater need is created, is that being charitable—no matter how well intentioned may be the motives behind it? What I am suggesting is that perhaps
need,with respect to Maimonides’ concept, is to be measured in terms of the effects on production of needed things, rather than in terms of the persons who lack these things, per se.
A sobering observation is that of St. Matthew,
Ye Have the Poor Always
For ye have the poor always with you…That is a pretty gloomy outlook. Should we just shed a tear, adjourn, and go home to our dry crust of bread? I think not, and I’ll tell you why. Another possible meaning of the St. Matthew observation is one in harmony with everything else in the Bible including certain key points such as the Golden Rule, the Decalogue, and the Sermon on the Mount. It is also affirmed by the interesting interpretations of the Bible by a Mexican scholar, Alberto Salceda, who has said,
only one system can be derived, the one which goes hand in hand with a rational and free human nature, mainly capitalism.In this sense, we might paraphrase St. Matthew as follows,
Mind ye, there will always be some among you who are poorer than others.Let us now explore this alternate meaning and test it with some seemingly valid evidence.
Income DifferencesWide differences in income are of common knowledge. In an age saturated with concepts of egalitarianism, justice tends to be equated with the degree of likeness in incomes and wealth. To this is added the human weakness of envy as a powerful catalyst for the egalitarian view. Many years ago while a graduate student, I began to ponder and study this problem. The fact of wide differences was beyond doubt. But why do they exist? It seemed clear that if you have more wealth than I do, there are three possible explanations: (1) you earned more, (2) you inherited it, or (3) you stole it. I ruled out (3) as a major cause of these differences because most thieves seem to be poor rather than wealthy. I ruled out (2) because if your rich uncle earned it honestly, it then becomes a (1) problem one generation back. That leaves only (1) as the explanation to be investigated.<p> In pursuing that line of inquiry, I came across the work of Pareto. He was a man of great genius, curiosity, and persistent devotion to collecting evidence on income differences for every time and clime he could find. When all his evidence was distilled, he found a persistent pattern of variation known to statisticians as a harmonic series. His pattern, incidentally, appears elsewhere in seemingly foreign phenomena such as the distribution of energy among molecules, the populations of cities and towns in a (mature) nation, and others. The issue now shifts to the question of whether these income differences are basically just or unjust. Can it be that everyone produces about equal amounts in terms of market worth, meaning that inequality of incomes is to be equated with injustice? I found this far from an adequate explanation for reasons we cannot treat fully here. But as a clue, it seemed to me that if all persons produced equally but were paid widely different amounts, employers who paid the top figures would go broke and those who paid the bottom figures would lose their employees to those paying more. In short, the search must go further.
The Law of VariationA good place to start is a bit of biographical reference to the work of Francis Galton, a nineteenth-century scientific genius. Skipping the earlier part of his remarkable life—for instance, learning to read at the age of two and a half years—we find his attention shifting to anthropometry and note his obsession with counting and measuring almost anything observable.
…he measured heads, noses, arms, legs, color of eyes and hair…breathing power…reaction time, the number of ‘fidgets’ per minute among persons attending lectures…test the dog population with a high-pitched whistle.Our present interest centers on his arranging each type of data he had collected so as to reveal the persistence pattern, throughout nature, of what has come to be known as the
normal curve.This is the bell shaped curve of frequency, perhaps best recognized as that used by teachers as a pattern for distributing grades among pupils in a class; for instance, in a class of twenty, there would be one A, four B’s, ten C’s, four D’s, and one F. When Galton discovered this pattern, his exultation is reflected in what he said about it in Natural Inheritance (1889):
I know of scarcely anything so apt to impress the imagination as the wonderful form of cosmic order expressed by thePerhaps we can excuse Galton for the excesses of his description. But without going overboard completely for his view, one can at least agree that there appears to be something about the occurrences of variations among different units of things in nature that reminds us of the universality of certain laws of physics and chemistry. In other words, it seems to be true that variation can be predicted with surprising accuracy as to both the fact and the form. The person who has probably done the finest scientific work on the forms of human variations is Professor Roger Williams, the famous biochemist at the University of Texas. He notes with dismay that almost every textbook of physiology portrays the human parts as though all persons were alike. Yet, for instance, there is quite a variation in the size and shape of human stomachs.Law of Frequency of Error.The law would have been personified by the Greeks and deified, if they had known of it. It reigns with serenity and in complete self-effacement amidst the wildest confusion. The huger the mob, and the greater the apparent anarchy, the more perfect is its sway…Whenever a large sample of chaotic elements are taken in hand and marshalled in the order of their magnitudes, an unsuspected and most beautiful form of regularity proves to have been latent all along.
Compounded VariationThe human organism is not a simple, single variant such as height. Mankind is apparently the most complex form of life. Each human is a package of innumerable separate characteristics, each of which may be assumed to vary from person to person by something like the normal curve, with all these characteristics varying independently of one another. Professor J. P. Guilford has, I believe, identified over sixty independent aspects of the mind alone (and suspects there are at least a hundred), each of which varies independently of the others from person to person. Note the effect this complexity has on the degree to which any person, as a functional unit, varies from other persons. To indicate the magnitude of variation, let us take a simple illustration by considering variations within each characteristic according to the normal curve. Let us say that I am seeking to employ someone who is capable of
Aperformance (among seven gradations) for one relevant characteristic only. You tell me, quite correctly, that I might expect to find one such person from among 26 persons picked at random off the street, so to speak. Let us say that I come to you again for help in finding a person who is not only
Agrade in the first characteristic but also
Agrade in a second one wherein our first selectee fails to measure up. You now inform me that I might expect to find one such person from among 676 picked at random. We go on in the same way until finally I tell you that I need someone who is
Agrade in each of seven different characteristics, at which point you report to me,
I wish you luck, because it would require more than double the population of the earth to expect to find one such person among them.Seen in this light, one can understand why, despite the plethora of self-esteemed and freely-advising baseball enthusiasts in the stands, there is only one Willie Mays who can deliver such performance out there on the field. Many other persons can run as fast, perhaps, but they can’t also do all the other things as well as Willie. That is why all those people—many with low incomes—pay high prices to see Willie play ball, yet will not come to watch me play, even for free; why Willie Mays, Marilyn Monroe, and many others in different walks of life earn higher incomes than most of the rest of us. It is because consumers vote that way in the marketplace for what each of us produces. To put it another way, if your mother buys a loaf of bread because she prefers it to the 25 cents which it costs, she cares not whether the one who produced it earns $5,000 a year or $50,000 a year. As far as she is concerned, this is the best bread available for her 25 cents. For if the market is free, we know that the relative incomes of the two producers reflects the worth of their services to your mother and others like her. We can also see why high incomes are fewer than low incomes and why
ye have the poor always with you.It is because, when complex units with variable independent component parts perform, individual weak points nullify strong points like links in a chain so that the chains that will hold the heaviest weight are few. This seems to be in the nature of things and is something we should work with rather than against, as one would with the tides or the winds.
The Best Way to Help the PoorMy basic theme, then, is that the best way to help the poor is to do everything possible to produce more rather than to waste time, energy, and costs trying to forcefully take from the rich the fruits of their labor and place it where they, as producers, consider to be not its best use. Judging best usage takes foresight and courage, in the face of one’s inclinations to help the poor who are close at hand and in view of the climate of opinion of most on-lookers. To take an extreme case, it is not easy to refrain from giving a starving person wheat today rather than to use it for seed and grow much more wheat which might be enough to prevent forty persons from starving later. The same principle, likewise, applies at all levels above starvation. Karl Marx’s objective of helping the needy working man has, in fact, been accomplished in the United States to an amazing degree by a method quite the opposite of his
surplus valueapproach. Greater production, in brief, is almost entirely a matter of permitting producers and savers to accumulate wealth for use in developing tools which, with the aid of harnessed energy, provide powerful leverage to human efforts devoted to production.
SummaryHow best to be
charitable,in an economic sense, has been a perplexing issue from the time of Genesis to the time of Galbraith. I have suggested places in the Bible where the answer seems a bit confusing, so I’ll let you read and judge that for yourself. The same goes for Galbraith. What I have attempted to do is to outline an analysis by which to judge both. We have noted how giving can come only from production, which puts a ceiling on giving irrespective of our hopes and intentions otherwise. We have noted how production can serve either immediate needs or be saved and used to greatly enhance the serving of needs later. We have noted that the best route—the just one—along this road of choices and decisions is through private ownership of what is produced and saved. We have noted that there will always be some who are poorer than others, and that their numbers will be great. This appears to be in the nature of things, because humans are highly complex and variable. As a consequence, production rates are highly variable in amounts and forms so that, under justice, incomes will be highly variable.